United States District Court, E.D. Pennsylvania
DENISE M. DAVIS and R. CRAIG DAVIS, Plaintiffs
DEUTSCHE BANK NATIONAL TRUST COMPANY AS TRUSTEE, HOMEWARD RESIDENTIAL, INC., and OCWEN LOAN SERVICING, LLC, Defendants.
S. Perkin, M.J.
matter is before the Court on Defendants' Motion to
Dismiss Amended Complaint or, in the Alternative, for Summary
Judgment filed on October 18, 2017. Defendants' Brief in
Support of Motion to Dismiss Amended Complaint, or in the
Alternative, for Summary Judgment was filed on October 18,
2017. Plaintiffs' Brief in Opposition to the
Defendants' Motion to Dismiss was filed on November 16,
2017. Defendants' Reply Brief in Support of Motion to
Dismiss Amended Complaint or, in the Alternative, for Summary
Judgment was filed on December 6, 2017. This Court has
subject matter jurisdiction pursuant to 28 U.S.C. §
1331. Having reviewed and considered the contentions of the
parties, the Court is prepared to rule on this matter.
R. Craig Davis and Denise Davis (“Plaintiffs”)
initiated this matter on September 16, 2016 against
Defendants Deutsche Bank National Trust (“Deutsche
Bank”), Homeward Residential, Inc.
(“Homeward”), and Ocwen Loan Servicing, LLC
“Defendants”) in the Court of Common Pleas of
Lancaster County. On October 13, 2016, Defendants filed a
Notice of Removal to this Court. On November 17, 2016,
Defendants filed a Motion to Dismiss Complaint. Thereafter,
on September 19, 2017, this Court granted Defendants'
Motion. Counts I, II, III, and V of the Complaint were
dismissed without prejudice, and Plaintiffs were given the
opportunity to file an amended complaint. On October 3, 2017,
Plaintiffs filed their First Amended Civil Action
(“Amended Complaint”) (Dkt. No. 16). In Count I
of the Amended Complaint, Plaintiffs allege a claim for
breach of contract against Deutsche Bank and Homeward. In
Count II of the Amended Complaint, Plaintiffs allege a claim
for breach of contract against Deutsche Bank and Ocwen. In
Count III of the Amended Complaint, Plaintiffs allege Ocwen
violated the Real Estate Settlement Procedures Act.
the averments in the Amended Complaint in the light most
favorable to the Plaintiffs, as the non-moving party, the
pertinent facts to this Court's determination are as
January 6, 2006, Plaintiffs obtained a loan from American
Bank in the amount of $260, 000. Am. Compl., ¶ 21.
Plaintiffs granted American Home Bank a mortgage as security
for repayment of the loan on their home located at 5 Thicket
Lane, Lancaster, PA 17602. Id., ¶ 22. American Home
Bank assigned the mortgage to Option One Mortgage Corporation
in 2006, which then assigned it to Deutsche Bank in 2015. Am.
Compl., Ex. A, p. 1. The mortgage agreement provides that the
lender may hire or appoint a loan servicer to collect loan
payments and administer the loan. Id., ¶ 21.
The mortgage is a federally qualified loan as defined by the
Real Estate Settlement Procedures Act (“RESPA”).
Id., ¶ 23. Payments under the loan were $1,
858.18, and it is not apparent that an escrow account for
payment of taxes and insurance was established at the
inception of the loan. Id., ¶¶ 24, 25.
mortgage states that the “[b]orrower shall pay all
taxes, assessments, charges, fines and impositions
attributable to the Property which may attain priority over
this [mortgage].” Defs.' Br., Ex. 1, p. 3 § 4.
In and around 2011, the Plaintiffs fell behind in payment of
the property taxes. Am. Compl., ¶ 28. In July 2012,
Plaintiffs paid delinquent taxes in the amount of $5, 599.54.
Id., ¶ 29. Homeward, the loan servicer at this
time, also paid the delinquent taxes. Id., ¶
31. Plaintiffs notified Homeward that Plaintiffs had already
paid the taxes and Homeward received a refund for the
duplicate tax payment from the taxing authority.
Id., ¶¶ 32, 33. The mortgage provides that
the “[l]ender may at any time, collect and hold [funds
for escrow items] in an amount not to exceed the maximum
amount a lender for a federally related mortgage loan may
require.” Defs.' Br., Ex. 1, p. 2 § 2. The
mortgage further states that all payments received will be
applied in the following order: first to prepayment charges
due under the note, then to funds for escrow items, then to
interest due, then to principal due, and finally to late
charges due under the note. Id., Ex. 1, p. 3 §
the delinquent tax issue, Homeward began to attribute
Plaintiffs' payment to an escrow account. Am. Compl.,
¶ 35. Plaintiffs were not notified of the imposition of
the escrow account or the new attribution of Plaintiffs'
payments to the escrow account rather than to interest and
principal. Id., ¶¶ 37, 39. Shortly
thereafter, Defendant Ocwen replaced Homeward as the
Plaintiffs' mortgage loan servicer. Id., ¶
41. As the new mortgage servicer, Ocwen also required a tax
escrow. Id., ¶ 45. Ocwen attributed
Plaintiffs' payments to the escrow account rather than
interest and principal. Id., ¶ 47. Ocwen
demanded a new monthly payment of $ 2, 424.71, which is
$566.53 more than the Plaintiffs' monthly payment prior
to creation of the escrow account. Id., ¶¶
notification of the change in payment amount, Plaintiffs
wrote to Ocwen on several occasions, requesting that Ocwen
review its escrow analysis, which Plaintiffs perceived to be
improperly researched, erroneous, and double the appropriate
amount. Id. ¶¶ 50, 51, 55. The Plaintiffs
wrote to Ocwen on July 21, 2013 and August 21, 2013, but
these letters went unanswered. Id., ¶¶ 56,
58, 60. On August 14, 2014, Plaintiffs' counsel wrote to
Ocwen regarding the perceived errors with the escrow account,
as counsel deduced from his review of Escrow Summary
Statements. Id., ¶ 61; Ex. F, p. 1. Nearly two
weeks after Ocwen received the August 14, 2014 correspondence
from the Plaintiffs' counsel, Ocwen responded by sending
Plaintiffs' counsel an account statement. Id.,
¶¶ 62, 63. On August 28, 2014, Plaintiffs'
counsel again wrote to Ocwen concerning the perceived errors
with the escrow account. Id., ¶ 64. Ocwen did
not respond to that letter. Id., ¶ 65. Ocwen
then sued the Plaintiffs in foreclosure on July 8, 2015 in
the Court of Common Pleas of Lancaster County. Am. Compl.,
¶ 68; Ex. A, p. 1.
STANDARD OF REVIEW
motion to dismiss for failure to state a claim, courts accept
all factual allegations as true, construe the complaint in
the light most favorable to the plaintiff, and determine
whether, under any reasonable reading of the complaint, the
plaintiff may be entitled to relief. Phillips v. County
of Allegheny, 515 F.3d 224 (3d Cir. 2008). “While
a complaint attacked by a Rule 12(b)(6) motion to dismiss
does not need detailed factual allegations, a plaintiff's
obligation to provide grounds for his entitlement to relief
requires more than labels and conclusions, and a formulaic
recitation of the elements of a cause of action will not
do.” Bell Atlantic Corp. v. Twombly, 550 U.S.
554 (2007) (citation omitted).
order to survive a motion to dismiss, a complaint “must
contain sufficient factual matter, accepted as true, to state
a claim to relief that is plausible on its face.”
Ashcroft v. Iqbal, 556 U.S. 662 (2009). A claim has
facial plausibility when the plaintiff pleads factual content
that allows the court to draw the reasonable inference that
the defendant is liable for the misconduct alleged.
Id. at 668. “Only a complaint that states a
plausible claim for relief survives a motion to
dismiss.” Id. at 679. When facing a motion to
dismiss for failure to state a claim, district courts are
directed to conduct a three-part analysis. Connelly v.
Lance Constr. Corp., 809 F.2d 780, 787 (3d Cir. Jan. 11,
2016). First, it must “tak[e] note of the elements
[the] plaintiff must plead to state a claim.”
Iqbal, 556 U.S. at 675. Second, it should identify
allegations that, “because they are no more than
conclusions, are not entitled to the assumption of
truth.” Id. at 679. See also Burtch v.
Milberg Factors, Inc., 662 F.3d 212, 224 (3d Cir. 2011)
(“Mere restatements of the elements of a claim are not
entitled to the assumption of truth.” (Citation and
editorial marks omitted)). Finally, “[w]hen there are
well-pleaded factual allegations, [the] court should assume
their veracity and then determine whether they plausibly give
rise to an entitlement to relief.” Iqbal, 556
U.S. at 679.
deciding a Rule 12(b)(6) motion, a court must consider only
the complaint, exhibits attached to the complaint, matters of
public record, as well as undisputedly authentic documents if
the complaint's claims are based upon these
documents.” Davis v. Wells Fargo, 824 F.3d
333, 341 (3d Cir. 2016) (quoting Mayer v. Belichick,
605 F.3d 223, 230 (3d Cir. 2010)). Plaintiffs attach to the
Amended Complaint the second page of the mortgage contract at
Exhibit C. The Defendants, on the other hand, attach the
entire mortgage contract to their Motion to Dismiss.
See Defs.' Br., Ex. 1.
the Plaintiffs have undisputed actual notice of all the
information in the Defendants' motion and the Plaintiffs
have relied upon this information in framing the Amended
Complaint, this Court is able to view the entire mortgage
contract on review of this motion to dismiss. Pension
Benefit Guaranty Corp. v. White Consolid. Indus., Inc.,
998 F.2d 1192, 1196 (3d Cir. 1993) (citing Cortec Indus.,
Inc. v. Sum Holding, L.P., 949 F.2d 42, 48 (2d Cir.
1991), cert denied, 503 U.S. 960 (1992)). See also Jacobs
v. Halper, 116 F.Supp.3d 469, 473 n.1 (E.D. Pa. 2015)
(quoting In re Burlington Coat Factory Sec. Litig.,
114 F.3d 1410, 1426 (3d Cir. 1997) (entire catalogue attached
as exhibit to motion to dismiss considered where same
catalogue was attached in part as exhibits to amended
complaint relied upon by plaintiff).
Breach of Contract - Deutsche Bank and Homeward (Count I) and
Deutsche Bank and Ocwen (Count II)
Count I of the Amended Complaint, Plaintiffs claim that the
mortgagee, Deutsche Bank, and the first loan servicer,
Homeward, breached the mortgage contract under Pennsylvania
law. Specifically, Plaintiffs allege the following:
72. [Homeward] was acting as the loan servicer pursuant to
the contract between Deutsche [Bank] and Plaintiff. Pursuant
to this contract, [Homeward] had a duty to properly service
the loan, provide appropriate notice of escrow changes,
perform escrow analysis and provide both an initial escrow
statement and a short year escrow statement so as to not
73. [Homeward] failed to notify Plaintiffs of the lifting of
the escrow waiver and the ...